Issues to Watch for With Exempt Computer Professionals

(Editor’s Note: This is the next in a series of guest blog posts about contract staffing, courtesy of Top Echelon Contracting, the recruiter’s back-office solution.  Similar posts will appear in future issues of The Pinnacle Newsletter Blog.)

One of the most popular industries for contract staffing is Information Technology.  It is also one of the trickiest to navigate in terms of overtime requirements.

The Fair Labor Standards Act (FLSA) requires that most employees have to be paid at a rate of 1.5 times their regular pay rate for any hours worked over 40 during a work week.  However, the FLSA allows for certain job classifications to be exempt from these overtime regulations.  In most cases, in order to be exempt, employees who fall into those classifications must be paid on a salary rather than hourly basis.

Not so for those in “Computer-Related Occupations.”  The FLSA does allow qualified workers to be exempt from overtime even if they are paid on an hourly basis, as long as their hourly rate is at least $27.63.  To confuse matters further, the required minimum rate is different for those employed in California, and it can change annually.  The required minimum rate in California increased from $37.94 to $38.89 on January 1.

Changes may also be on the horizon for the federal law.  According to Business Management Daily, the Computer Professionals Update Act (CPU) has been introduced in the Senate with the goal of updating the FLSA in light of professions that have emerged as the Internet has grown.  Previously, the FLSA specified that those employed as a computer systems analyst, computer programmer, software engineer, or another similarly skilled position were eligible for the Computer-Related Occupations exemption.

The Act would more broadly define computer professionals as “any employee working in a computer or information technology occupation (including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, or other similarly skilled worker.”  They will still have to be paid at a rate of $27.63 per hour or greater ($38.89 or more in California) to be considered exempt from overtime.

If you place IT contractors, you may want to be familiar with these developments and keep a close eye on the progress of the CPU.

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